💸Moving money with Cash App or Zelle? Here’s how to make those payments safer

Cash is king, as the saying goes, but not many of us carry it around anymore.

Instead, peer-to-peer payment apps like Venmo, PayPal, and Zelle give the convenience of cash right on our phones. But what happens when something goes wrong, maybe a type of scam. Could your hard-earned money be at risk?

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“Once you’ve sent it, you’ve spent it,” Consumer Reports Editor Octavio Blanco said.

That’s what many electronic payment apps tell users. Sure, they’re speedy and convenient, but Consumer Reports warns their lack of user protections – like those offered with most credit cards – can make these services very attractive to fraudsters and risky for consumers.

“The main risk in using a P2P app is that you have no recourse in getting your money back if you send money to a scammer or to the wrong person or if you send the wrong amount because of a typo,” Blanco said.

In 2021, the Federal Trade Commission said there were more than 70,000 reports of fraud and $130 million in losses with mobile payment apps.

And the apps are under fire from consumer advocates demanding protection from fraud and errors for users.

But until that happens, Consumer Reports said one way to protect your payments using P2P apps is to link your credit card to the app and fund your payments through that credit card.

When you do that, you could benefit from the same purchase protections that your credit card offers. But it might not be free. Many P2P apps charge about 3% when you use a credit card.

If you do choose to keep your P2P app linked to your bank account, Consumer Reports offers this word of caution.

“If you are going to be using your P2P account for things like sending money to people you don’t know, you really have to be very careful because you have no way if something goes wrong, to get that money back and that could be very costly.”

Consumer Reports contacted Cash App, PayPal, Venmo and Zelle. Here are the companys’ statements:

“Preventing fraud is critically important to Cash App. We continue to invest in and bolster fraud-fighting resources by increasing staffing, educating our customers, and adopting new technology. We are constantly improving systems and controls to help prevent, detect, and report bad activity on the platform.” - Cash App

The security of PayPal and Venmo users and their account information is a top priority and we take all the necessary steps to protect our customers. We’ve always made preventing bad actors from using our platform a top company priority. We have a zero tolerance policy for fraudulent activity, and our teams are working tirelessly to protect customers against anyone attempting to defraud well-intentioned individuals. - Paypal/Venmo

Zelle® and its participating financial institutions monitor payment activity on the network 24/7 for suspicious activity and to help proactively protect consumers. If a consumer believes they have fallen victim to a scam, they are encouraged to contact their bank, credit union or Zelle immediately. We believe that the best protection is prevention and we offer educational resources on how to effectively use Zelle and how to spot potential fraudsters and scammers. - Zelle

All of them said keeping users informed and educated — and protecting them from fraud are top priorities.

How to link your credit card to your P2P account

The process for changing the payment source in the various apps is not always obvious. Here’s a handy cheat sheet.

Apple Pay

From a Mac or an iPad: Open “Wallet” settings on your device. • On your Mac model with Touch ID, go to System Preferences >> Wallet & Apple Pay.• On your iPad, go to Settings >> Wallet & Apple Pay.

Tap Add Card >> Follow on-screen directions to add a card. >> Verify your information with your bank or card issuer, who may require more information.

From an iPhone: Open the “Wallet” app, tap the “plus” button. >> Tap “Debit or Credit Card.” >> Tap “Continue.” >> Follow the steps on the screen to add a new card. If prompted, choose your bank or card issuer from the list or find them using the search bar. >> Verify your information with your bank or card issuer, which may require more information or may ask you to download an app before approving your card. >> If you have a paired Apple Watch, you have the option to also add the card to your watch.

Cash App

From a computer: Not possible.

From a smartphone: Open Cash App. >> Tap the “Profile” icon in the top right corner of the Cash App home screen. >> Then under options, tap “Linked Banks.” >>Tap “Link Credit Card” and enter the requested information. >> Then tap “Add Card” and the card will be on file.

PayPal

From a computer: From the PayPal home page, log in to your account. >> Then click “wallet” at the top of the page. >> Then, on left side of the page, click “Link a debit or credit card.” >> Then follow the instructions on the page to link your card.

From a smartphone: Log in to your account. >> Tap “wallet.” >> Then tap the plus symbol (+) to the right of “Banks and Cards.” >> Tap Debit and Credit Cards. >> Then link your card manually or connect your PayPal account to your bank.

Venmo

From a computer: From the Venmo home page, click “Edit payment methods.” >> Then click on “Add Debit or Credit Card” and add your card information.

From a smartphone: Open the Venmo app >> Go to the “You” tab by selecting the single person icon. >> Tap the Settings gear in the top right, then tap “Payment Methods.” >> Tap “Add bank or card,” then tap “Card.” >> Add your card information manually or with your phone’s camera.

P2P still linked to your bank? Take these precautions

• Send money only to people you know. Many peer-to-peer transactions are instantaneous and irreversible, a fact that scammers know and exploit.
• Avoid P2P services for purchasing goods or services from strangers on the internet. If you do use the apps to pay a service provider or to buy something, make sure you know them and trust them. Also, the terms of service for most apps prohibit the use for purchasing goods and services. Ask the retailer or service provider if they would use an app specifically created for business users, like Venmo for Business, Square Cash for Business, or PayPal (though not the Friends and Family option).
• Search the app for customer service contacts and procedures before you use it. That way you’ll know where to go and what to expect when you need help.
• Keep your app up to date. If you have old software, you’re missing the latest security patches.
• File a complaint. Companies accredited by the Better Business Bureau, including Venmo and Zelle’s operator, Early Warning Service, are required to respond to consumer complaints, says Sandra Guile, a spokesperson for the bureau. You also can lodge a complaint with the Consumer Financial Protection Bureau’s Consumer Complaint Database. The organization’s policy has been to report problems to companies for them to resolve.